careful, page-59

Haka,

I agree that breaching LVR covenant is not a big deal as long as they are able to service their debt payment obligations.
(ICR covenant is met, and they could make principal repayments )

If LVR is breached, it only give the banks the opportunity to negotiate with them for potentially a higher margin- which is what banks normally would do.

Even though Valad IS has mentioned that covenants are in compliance, and my estimate as in earlier posts showed the same, We have seen Valad taking a proactive approach in negotiating with its banks re covenants and loan.

Meanwhile, they are trying to cut costs, and minimise loss from its VCS and property development businesses to improve profitability and preserve value for shareholders.

This is a good sign. We haven't heard any bank imposing anything on VPG so far. Although, we might see certain conditions (eg. higher margin, requirement for asset sale to deleverage) being imposed by banks in its HY accounts announcement to be released on 25 Feb.

Yes. I believe the banks got a lot of other worries. If their assessment is that VPG will still be able to service its debt obligations, they may as well extend the loans with a higher margin.

The higher margin will be offset by lower base interest rates nowadays in Australia,UK and other parts of Europe.